Should we be concerned over growing China investments?
China’s growing investments in Malaysia have, not surprisingly, become the opposition’s favourite fodder for criticism but analysts and local business leaders are convinced of the economic gains awaiting the nation.
They say Malaysia’s success in securing investments from one of the world’s leading economic powerhouses should not be viewed as a threat that will rob the local industries of business opportunities.
Stressing that the investments from China are similar to those from other countries, they say Malaysians must not be tricked into believing the falsehoods spewed out by certain quarters that did want to see the country progressing.
There is nothing peculiar about China choosing to invest in Malaysia, they point out, adding that the former is also taking its investments to various African nations and countries like Singapore, Australia and the United States.
“I don’t see why anyone should make a fuss out of it as Malaysia also attracts investments from other countries, like Singapore,” remarked Chin Yew Sing, head of Oriental Strategy Research Centre, a local policy research outfit.
He said China’s One Belt, One Road (Obor) policy – one of Beijing’s most ambitious foreign economic development initiatives – has led to a bigger outflow of investments to other countries, including Malaysia.
During Prime Minister Najib Abdul Razak’s trip to China last November, the Malaysian delegation sealed 14 business deals worth some RM144 billion, said to be among the biggest overseas investments undertaken by China.
China is also involved in other ongoing developments in Malaysia, including projects in the Iskandar Malaysia zone in Johor Baru; the RM4 billion Kuantan Port expansion job, which will see the construction of a new deepwater terminal; the RM55 billion East Coast Railway Line, a new double-track rail project connecting Port Klang in Selangor to Tumpat in Kelantan; and the multi-billion ringgit Forest City in Johor Baru, a mixed-development project to be built on four man-made islands on the Malaysian side of the Johor Strait.
XXX In an exclusive interview published by Sin Chew Daily on Jan 10, Muhyiddin said inviting mainland Chinese investments into the country has become a source of unhappiness among locals, including the Malays and Chinese. He even claimed that investments from China will rob locals of their rice bowl.
XXX Being an open economy, Malaysia has to welcome FDIs from any country, including China which has been Malaysia’s biggest trading partner since 2009.Responding to critics, Najib, in his winding-up speech at the end of the 2016 Umno general assembly, said his visit to China in November last year was merely to secure new investments from one of the biggest economies in the world in order to boost Malaysia’s economy. He also stressed that the investments would, in no way, compromise this nation’s sovereignty.
China’s Obor initiative
China’s Obor initiative, mooted by President Xi Jinping in 2013, focuses on 65 countries in Asia, Europe and Africa with a combined population of 4.4 billion and gross domestic product of US$21 trillion.
To encourage and provide major financing to Chinese firms wishing to invest outside the country, China has set up three financial entities – Asian Infrastructure Investment Bank, New Development Bank and Silk Road Infrastructure Fund – with initial capital totalling US$40 billion.
Chin said since Malaysia was included in the Obor initiative, it was only natural for Chinese firms to increase their investments in this country as they have access to the financial facilities offered by the newly-established institutions.
Adjunct Fellow at the Institute of South-East Asian Studies at the Singapore-based S Rajaratnam School of International Studies Dr Oh Ei Sun said with the current lacklustre economic climate worldwide, not many countries were willing to take their investments offshore.
“Over the past 10 years or so, many countries have not been undertaking foreign investments due to the economic slowdown in the US. China appears to be among the few nations still investing in other countries.
“And, China is one country that likes to undertake large-scale investments, so this is something we all have to get used to,” he added.
More business, employment opportunities
Federation of Chinese Associations Malaysia president Pheng Yin Huah said China’s investments would not only help to make Malaysia’s economy more vibrant but also create more employment and business opportunities for the locals.
“It’s going to be mutually beneficial for Malaysia and China,” he said, adding that under the Obor initiative, China was encourging its investors to scour for opportunities globally.
“Malaysia has become a beneficiary of this particular policy. In fact, we should welcome such investments from China, considering that Malaysia is currently experiencing slower economic growth. We need foreign investments to stimulate our economy… I certainly disagree with the opposition claims that it won’t benefit us.”
Acknowledging the likelihood of the Chinese investors bringing their own manpower, technical expertise and materials to Malaysia, instead of tapping into local resources, Pheng said such fears were not entirely unfounded as China has its own technical skills and cost-efficient business practices.
He suggested that the International Trade and Industry Ministry (Miti) coordinate all the investments to ensure that China used materials procured from Malaysia and undertook joint ventures with local business entities.
“Only then will there be a win-win situation… but I believe their (Chinese) investments here have more pros than cons. Local businesses like supermarkets and restaurants will benefit from their presence in our country,” he added.
Malaysia-China Business Council chairperson Ong Ka Ting has also urged Malaysians not to view the proposed Chinese investments negatively as past experiences have shown they were, indeed, a catalyst for growth for the local economy.
Pointing to the Malaysia-Kuantan Industrial Park, Malacca Port and Xiamen University’s Malaysian campus projects, Ong said the Chinese corporations involved in these developments had established joint-ventures with local partners.Likewise, the Kuantan Port expansion project was also a 60:40 joint venture between IJM Corporation Bhd and Beibu Gulf Holding (HK) Co Ltd, with the Malaysian government having a special rights share.
According to statistics revealed by Ong in press reports, as of Dec 31, 2015, a total of 191 manufacturing projects with participation from China were implemented in Malaysia. Their investments, amounting to RM7.8 billion, created 20,587 jobs in the country.
Miti statistics show that in 2015, China invested a total of RM10.46 billion in Malaysia in 2015, while Malaysian companies invested RM31.38 billion in China.